Wednesday, 27 July 2011

Hike in excise duties for cars on the cards




This could be a double whammy for the automobile industry and in turn for the consumers as well. While the automobile industry is still reeling under the pressure of rising fuel prices and interest rates, according to a report in The Business Line, the Finance Ministry concerned over the expected shortfall in tax revenues is likely to take a call on revising excise duties on cars and tobacco-related products this week. Excise duty on both the products was not revised in the Union Budget this year.
The report quoted an official as saying that “Various suggestions have come on this (revising the excise duty), but no final view has emerged. The Finance Minster is expected to decide once he is back from the UK.” However, sources said that the task was not an easy one. As the rate of growth of manufacturing and capital goods is on a decline, any duty hike would affect demand, they said. There is also the fear of a fall in investment demand.

It was mentioned that the hiking the duties of cars will not be that easy and the automobile industry has been lamenting about the hard times, with sales growth slowing and costs rising. But there are some suggestions, such as raising the duty on diesel-run and high-end cars. Small petrol cars could be spared.
At present, the petrol cars which are below 1200 cc and up to 4 metres width have 10 percent duties and it is the same for diesel cars upto 1500cc but below 4 metres. And the petrol cars with above 1200 cc engine and above 4 metre rule attract a duty of 22 percent and Rs 15,000 where as the diesel cars above 1500 cc engine and 4 metre width rule attract the same duty of 22 percent and Rs 15,000. 

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